156: EDA Public Works in RI, 1996-2000 - State of Rhode Island ...

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156: EDA Public Works in RI, 1996-2000 - State of Rhode Island ...

STATEWIDE PLANNING PROGRAM

TECHNICAL PAPER

Number: 156

Date: September 2004

EDA PUBLIC WORKS IN

RHODE ISLAND, 1996-2000

STATEWIDE PLANNING PROGRAM

Rhode Island Department of Administration

One Capitol Hill

Providence, Rhode Island 02908-5870

www.planning.ri.gov


The Statewide Planning Program, Rhode Island Department of Administration, is

established by Chapter 42-11 of the General Laws as the central planning agency for state

government. The work of the Program is guided by the State Planning Council, comprised of

state, local, and public representatives and federal and other advisors.

The objectives of the Program are: (1) to prepare strategic and systems plans for the

state; (2) to coordinate activities of the public and private sectors within this framework of

policies and programs; (3) to assist local governments in management, finance, and planning;

and (4) to advise the Governor and others concerned on physical, social, and economic topics.

This Technical Paper is one of a series prepared by the Statewide Planning Program.

They all present information developed through planning activities to state and federal agencies,

local governments and the public.

Activities of the Program are supported by state appropriations and federal grants. The

contents of this report reflect the views of the Statewide Planning Program which is responsible

for the accuracy of the facts and data presented herein. The contents do not necessarily reflect

the official views or policies of other sponsoring agencies. This publication is based upon

publicly supported research and may not be copyrighted. It may be reprinted, in part or full, with

the customary crediting of the source.

Contact the Statewide Planning Program, One Capitol Hill, Providence, RI (401) 222-

7901. Copies of this report are also available on the web at www.planning.ri.gov. Copies may

also be made available as an electronic file.


ABSTRACT

TITLE: EDA Public Works in Rhode Island, 1996-2000

SUBJECT:

A performance assessment of projects funded by the U.S.

Department of Commerce, Economic Development

Administration (EDA)

DATE: September 2004

AGENCY Statewide Planning Program

AND

Rhode Island Department of Administration

SOURCE OF One Capitol Hill

COPIES: Providence, RI 02908

SERIES NO.: Technical Paper 156

NO. OF PAGES:

ABSTRACT:

41, plus two appendices

This technical report presents the results of a survey of nine

EDA-funded projects that were priority listed in Rhode

Island’s Overall Economic Development Program (OEDP) or

the Comprehensive Economic Development Strategy

(CEDS). Examined are the impacts of the projects on job

generation, wages, and promotion of other development, as

well as process-related issues such as selection criteria,

grant awards, project location, and commitment from the

private sector. Changes in the CEDS application process

are suggested to enhance performance in both process and

results.

i


PREFACE

In 1971, the State Planning Council assumed responsibility as the State of

Rhode Island’s Overall Economic Development Program (OEDP) Committee.

Four years later the first annual report appeared that established a priority

ranking system to screen projects being proposed for funding by the U.S.

Economic Development Administration (EDA). Each project would attain points

based on criteria measuring job development potential, area of influence,

environmental considerations, completion of necessary studies, availability of

non-federal matching funds, and recent fluctuations in employment levels. The

scores obtained would be the basis of a project’s priority ranking, the highest

scores attaining the highest priority.

This system is still the basis of project selection in Rhode Island.

Remarkably, while categories within the criteria are periodically revised to reflect

changing conditions or to enhance their effectiveness in choosing the best

projects, the criteria at their core have remained the same. However, while

Rhode Island has nearly thirty years of practice selecting projects for priority

listing, there has not been a performance evaluation to see how well, or how

poorly, the projects meet their economic development objectives once funded

and implemented. That is the purpose of this technical paper.

EDA Public Works in Rhode Island, 1996-2000 is a survey that begins

with the OEDP project solicitation of 1995, ends with the Comprehensive

Economic Development Strategy (CEDS) solicitation of 1999, and assesses the

impact of the projects on employment, wages and economic spin-off through

2003.

This technical paper was written by Bruce F. Vild, Supervising Planner,

and Joyce S. Karger, Principal Planner, of the Economic Development Planning

Section of the Statewide Planning Program. It was prepared for publication

under Task 2101, as described in the Work Program for the Statewide Planning

Program for state fiscal year 2004. State appropriations and a grant from the

EDA under Section 203 of the Public Works and Economic Development Act of

1965, as amended, supported this work.

The authors of this paper would like to thank the following individuals who

were willing to provide information about the projects undertaken by their

communities, agencies or nonprofits: Kathryn Callan, Providence Performing

Arts Center; Nancy Carrott, R.I. Economic Development Corporation; Alan

Goodwin, City of Newport; Roberta Bell Hourigan, Heritage Harbor Museum;

Michael Lepore, City of Providence; David Maher and Michael DeLuca, City of

Cranston; Joel Mathews, City of Woonsocket; and Linda Soderberg, R.I.

Department of Labor and Training.

ii


We also acknowledge the assistance of Stephen Grady and Cassandra

Lighty from the Philadelphia Office of the EDA in obtaining information about

EDA grant awards and non-federal matching funds for the period surveyed.

This paper incorporates a system whereby notes and references are cited

by a number in double parentheses. These numbers correspond to the citations

in the Notes and References beginning on page 33. Under this system, quoted

or paraphrased material from the ninth reference would be cited ((9)).

iii


TABLE OF CONTENTS

Abstract

Preface

List of Tables

List of Figures

Page

i

ii

v

v

Part One: INTRODUCTION 1

Statewide Planning’s review and need for follow-up 2

Focus of our research 3

Part Two: SELECTION OF PROJECTS FOR REVIEW 5

Part Three: ASSESSMENT OF THE OEDP/CEDS PROCESS 7

Question 1: How high did the projects funded by the EDA score relative 8

to other OEDP or CEDS proposals that year?

Question 2: On what criteria did the projects score the most points? 8

Question 3: How did the EDA funds awarded actually compare with the 9

amount on the OEDP or CEDS application?

Question 4: How many projects had a share of the match from private 11

sources?

Question 5: Where were the projects located? 12

Assessment 13

Part Four: PROJECT PERFORMANCE, ONCE FUNDED AND IMPLEMENTED 14

Did community employment figures improve? What was the contribution 14

of each project?

How do the actual job generation figures compare with those anticipated 16

from the OEDP and CEDS applications?

What was the impact of the project on wages? 19

Have the projects promoted other development? 20

Assessment 26

Part Five: RECOMMENDED CHANGES IN THE CEDS APPLICATION PROCESS 30

Findings: Job generation 31

Findings: Wages 32

Other findings 32

iv


NOTES AND REFERENCES 33

Appendix A: SUMMARY OF OEDP/CEDS PRIORITY SYSTEM FOR RANKING A-1

PROJECTS

Appendix B: APPLYING MULTIPLIERS: A SAMPLE CALCULATION B-1

LIST OF TABLES

Table

Page

1 OEDP/CEDS Projects in Rhode Island Funded by the EDA, 1996-2000 10

2 EDA Funds: Comparison of OEDP/CEDS Applications and EDA Grant 11

Awards

3 Location of EDA-funded Projects 12

4 Annual Average Resident Employment in Host Communities 15

5 Annual Average Establishment Employment in Host Communities 17

6 Direct Employment Generated by EDA-funded Projects, 1996-2000 18

7 Average Employment and Wages in Affected Industries, 1995-2002 21

8 Employment Multiplier Effects of EDA-funded Projects, 1996-2000 24

9 Construction Multiplier Effects of EDA-funded Projects, 1996-2000 25

10 Project Ranking and Performance 27

LIST OF FIGURES

Figure

Page

1 Average Annual Wages in Affected Industries 22

v


Part One:

INTRODUCTION

Under a planning grant obtained from the U.S. Department of Commerce,

Economic Development Administration (EDA), the Statewide Planning Program

prepares and maintains Rhode Island’s Comprehensive Economic Development

Strategy (CEDS). The CEDS is intended to link state and federal policy with

local economic development. The CEDS consists of goals and implementation

mechanisms based on the primary economic development element in the State

Guide Plan, the Economic Development Policies and Plan. The EDA takes an

active role supporting Rhode Island’s CEDS, not only by providing financial

assistance through the grant, but by reviewing and approving annual reports,

evaluations, and program updates connected with the CEDS.

Central to the CEDS is the project solicitation Statewide Planning

conducts each year to develop the Priority Project List. The proposals received

are reviewed and scored according to several specific criteria ((1)). These

criteria are designed to select proposals that will help implement the Economic

Development Policies and Plan as well as meet basic EDA eligibility

requirements. Those that score well are placed on the Priority Project List.

Statewide Planning considers the proposals chosen for the list to be good

candidates for the EDA’s public works grants or other types of assistance.

Having a proposal placed on the Priority Project List is only provisional

approval. An EDA-mandated CEDS Committee must review, confirm and

endorse the list. In Rhode Island, the CEDS Committee has three tiers: the State

Planning Council, its Technical Committee, and a CEDS Subcommittee drawn

from members of the Technical Committee and local economic development

practitioners. When the Priority Project List is presented to the EDA in the CEDS

annual report, the approval of the CEDS Committee must be documented. Such

approval indicates to the EDA that the projects have been endorsed at the state

level and are consistent with the CEDS.

Approval is still “provisional” or “conditional” at this point, and project

proponents must request funding from the EDA and be invited to apply.

However, placement on the Priority Project List is key to further action by the

EDA. For the EDA, the list represents an important “first cut” in the grant

approval process. Making the list is, in practice, the first step in submitting a

successful application to the EDA.

As the EDA will subject each proposal to a rigorous review beyond what is

required under the CEDS, not every project on the Priority Project List will

ultimately win EDA funding, but every project winning that funding will have been

on the list.

1


Statewide Planning’s review and the need for follow-up

At the end of the CEDS project solicitation period, Statewide Planning

reviews the proposals to make sure they satisfy certain threshold requirements

such as consistency with the State Guide Plan. Then the projects are scored,

giving proposals additional credit for generating well-paying jobs, being located in

areas of economic distress, and having solid commitments of matching funds

and private investment. This conforms to basic eligibility requirements ((2)),

investment guidelines and other means the EDA uses to screen the proposals it

receives for funding.

Until now there has not been a review of the program spanning several

years to gauge the success of Rhode Island’s CEDS in selecting projects that

ultimately will prove attractive to the EDA. While we frequently revisit the scoring

criteria to keep them in line with state and federal policy, Rhode Island’s

experience has been that, of the twenty or more proposals making the Priority

Project List each year, only two or three of them at most get funded. What are

the reasons for this?

Some successful CEDS applicants do not carry their proposals to the next

step, a request for funding from the EDA. They may have not secured

anticipated matching funds, been unable to acquire clear title to property,

required further study, or had other reasons to postpone their request. We have

tried to address this issue by disallowing these proposals from being submitted

again, unless some contact has been made with the EDA to advance the

proposal. This policy went into effect with the 2003 project solicitation.

Others unsuccessful in obtaining funding may have submitted concept

papers to the EDA describing their projects, only to be informed that they failed to

meet eligibility requirements ((3)). Still others may have had their projects judged

less “competitive” for the limited EDA funding than other projects in other parts of

the country. These outcomes are discouraging not only for the applicants, but for

the staff overseeing the CEDS. Understanding that the CEDS serves as the

initial screen for funding eligibility, we need to examine whether the CEDS

scoring criteria are up to the job of selecting good (i.e., fundable) projects – and,

more fundamentally, whether the state’s goals in the CEDS are eclipsing or

conflicting with what the EDA is emphasizing during a given grant period.

Follow-up

Another issue is the “disconnect” once the priority list is finalized and sent

to the EDA. At that point Statewide Planning essentially leaves the process,

except if contacted by project proponents for assistance in putting together their

applications to the EDA. Projects are funded, completed and open for business

with little or no follow-up either with or by Statewide Planning. The evidence we

2


glean of economic benefit from the projects is largely anecdotal, or inferred from

employment statistics from the R.I. Department of Labor and Training (DLT).

Without a reliable reading of project outcomes important to the EDA,

particularly job creation, we may be missing insights that could lead to

improvements in the CEDS – in the strategy itself, and in the criteria we use to

score projects. This includes fashioning priority lists with more competitive

projects (from the EDA’s standpoint), and getting more projects funded as a

result. The relatively small number of projects that get funded from our priority

lists may be speaking to this problem.

This is not considered a criticism per se of the project proponents, the

EDA, or for that matter Statewide Planning. In hindsight, this agency should

have pursued this information more actively. We have done so now with the

hope that it will indicate what we have done right with the CEDS, and what needs

improvement.

Focus of our research

In 2002, the Rhode Island College Center for Public Policy applied for a

capacity building grant from the EDA to conduct a comprehensive review of all

EDA-funded projects in Rhode Island, from 1965 to 2001. The intention was to

determine how well the projects performed in terms of job creation, economic

partnership creation, leveraging additional funding, and other indicators of

success. One product of this research was to be a performance measures

handbook for guiding future projects and scoring criteria under the CEDS.

Statewide Planning was to contribute to this effort, providing access to files and

reports, advice, institutional memory, and other assistance including review as

requested by the Center. That project, unfortunately, was not funded by the

EDA, and the answers we anticipated from it were not forthcoming.

The aim of this technical paper is to initiate and complete what was to be

the Center for Public Policy’s task, though more modestly. We wanted to

determine whether the economic benefit anticipated from EDA-funded projects

was actually obtained – employment at decent wages in economically distressed

areas, with a strong commitment from local officials and the private sector. We

also wanted to see how well the process worked in soliciting and selecting

projects likely to be funded by the EDA. Our methods included examination of

data from the DLT, conversations with project proponents, and a review of past

project solicitations to see how well the funded projects scored relative to other

proposals. If this research shows that improvements in the program are needed,

the intention will be to concentrate that effort on the aspect most obvious to

applicants and reviewers, the CEDS Priority Project Rating System that includes

the scoring criteria.

3


Reference is made in this report to the OEDP (Overall Economic

Development Program). This was the predecessor of the CEDS, the name

change effective from 1999. Most of the projects in our survey began as OEDP

applications, subject to threshold and scoring criteria in the same manner as

more recent CEDS projects. For the purposes of this paper, the acronyms

OEDP and CEDS are interchangeable.

4


Part Two:

SELECTION OF PROJECTS FOR REVIEW

Unlike the Center for Public Policy, we limited our project review to the

five-year period 1996 to 2000. The years 1996 to 2000 were selected to allow for

project completion and measurable results, including the commitment of funds

from non-federal sources (including private funds), job generation, and spin-off

activity. The period pertains to federal fiscal years, not calendar years; i.e.,

1996” for the purposes of our discussion runs from October 1, 1995 to

September 30, 1996, “1997” from October 1, 1996 to September 30, 1997, etc.

During that time, the EDA awarded grants to the following projects in

Rhode Island:

• Providence Performing Arts Center Expansion, Providence (1996)

• Heritage Harbor (Rhode Island Heritage Museum), Providence (1997)

• Bulkhead Replacement, Port of Davisville, North Kingstown (1997)

• Halsey Street Industrial Park Expansion, Newport (1998)

• Gorham Site Redevelopment, Providence (1998)

• Cranston Street Armory, Providence (1999)

• Pier 2 Structural Repairs, Port of Davisville, North Kingstown (1999)

• Ladd Center Infrastructure, Exeter (1999)

• Narragansett Brewery Redevelopment, Cranston (2000)

• Stadium Theater Restoration, Woonsocket (2000)

The Cranston Street Armory was excluded from this review. Although the

work funded by the EDA grant was completed, the building will now be placed in

a different use than was originally proposed. It is not yet occupied, so a direct

economic impact (specifically job generation) cannot be demonstrated. Reuse

plans are still under discussion, and may eventually be expanded to include

neighborhood groups seeking a space for their activities. On the other hand, all

of the other projects have created or retained jobs, the number of which has

been documented by the applicants or developers.

The applicants sponsoring these projects included the City of Providence

(Performing Arts Center Expansion, Heritage Harbor, and Gorham Site

Redevelopment), the City of Newport (Halsey Street Industrial Park Expansion),

the City of Cranston (Narragansett Brewery Redevelopment), and the City of

Woonsocket (Stadium Theater Restoration). The R.I. Economic Development

Corporation proposed the Davisville Bulkhead Replacement, Pier 2 Structural

Repairs, and, as partners with the Central Rhode Island Development

Corporation, the Ladd Center Infrastructure project ((4)).

We contacted the applicants for information regarding new and retained

jobs. The remainder of the data on economic impact was obtained from the R.I.

5


Department of Labor and Training, from the original CEDS and OEDP files, and

from the Public Works Division at the EDA. These sources are credited as

appropriate throughout this report.

6


Part Three:

ASSESSMENT OF THE OEDP/CEDS PROCESS

The primary economic development element of the State Guide Plan, the

Economic Development Policies and Plan, lays the groundwork for actions that

address the development of industries with high potential, employment

enhancement and job training, public and private investment, industrial sites and

infrastructure, economic and cultural diversity, and many other topics. First

through Rhode Island’s OEDP and then the CEDS, planners and practitioners in

the public and private non-profit sectors – at the state, regional, and local levels –

are encouraged to submit creative project proposals that implement their own

economic development strategies, as well as the Plan’s long-term objectives.

The criteria developed for the CEDS Priority Project Rating System

address specific needs identified in the Economic Development Policies and Plan

as well as issues that must be addressed to ensure consistency with other

elements of the State Guide Plan. The State Planning Council and Technical

Committee must approve any changes to the criteria proposed by the CEDS

Subcommittee before they can be applied in the next project solicitation.

We require that CEDS applicants identify a specific objective or policy

from the Policies and Plan that their project proposals will help implement. Then,

we use the Priority Project Rating System to award points based on where we

want to focus development, on the projects’ impacts on employment and wealth

generation, on the commitment of other funding sources to the projects, and on

the economic programs we hope to tap. For example, one criterion in the Rating

System assesses how many permanent, non-construction jobs are to be

generated per EDA dollar invested – and what the anticipated wages will be.

Another determines the amount and source of non-federal support the applicants

are committing to the project and awards points accordingly.

The CEDS Committee continuously refines and revises the Rating System

criteria so that projects selected for the Priority List reflect and effectively

implement the state’s economic development objectives as outlined in the CEDS

5 Year Update and the Annual Reports.

The jobs created as a result of EDA’s investments should provide higherthan-average

wages in distressed communities and should promote regional

prosperity. Applicants should commit a high level of non-federal matching funds,

including private investment. This will indicate a higher level of commitment to

successful completion by the public sector and higher market-based credibility by

the private sector.

This study seeks to determine whether the economic benefit anticipated

from EDA-funded projects was actually obtained: employment at decent wages in

7


economically distressed areas, with a strong commitment from local officials and

the private sector. We also wanted to determine how well the CEDS process is

working in soliciting and selecting projects likely to be funded by the EDA.

Based on what we learn from this study, we may determine that the

Priority Project Rating System requires further revision. This could mean

adjusting the point scales for the criteria, adding new criteria, or eliminating

criteria that did not prove effective. The following questions were posed.

Question 1: How high did the projects funded by the EDA score relative to

other OEDP or CEDS proposals that year?

Of the nine projects under analysis, three scored in the top ten percent in

their respective years. The Stadium Theater Restoration project in Woonsocket

placed first among 30 project proposals submitted in 1999. In 1998, the

RIEDC/CRIDCO/Ladd Center project placed second among 36 proposals. In

1997, the Providence Gorham Site Redevelopment project placed fourth among

41 proposals.

Standings within the top ten percent were not consistent in other projects

that won EDA funding, however. The RIEDC/Bulkhead Replacement project was

eleventh out of 81 projects proposed in 1996, placing it in the top 20 percent for

that year. Also in 1996, the Providence Heritage Harbor Museum project ranked

thirty-second, only within the top 40 percent.

In 1998, the RIEDC/Pier 2 Structural Repairs project was eighth among 36

proposals, placing it in the upper 25 percent for that year. In 1995, the

Providence/PPAC project (the only proposal funded that year) was twenty-third

among 67 proposals, or in the upper 35 percent.

The lowest ranking project was the Newport/Halsey Street Industrial Park

Expansion, which was seventeenth among 41 proposals, placing it only as high

as the top 42 percent for 1997 ((5)). (See Table 1.)

Question 2: On what criteria did the projects score the most points?

Some projects received the maximum scores for more than one criterion

in the Priority Project Rating System. Others may have received less than the

maximum scores, but had their high scores (where they received the most

points) distributed among two or three criteria. The three criteria giving most of

the projects in our survey their highest number of points were jobs, funds, and

income.

8


The jobs criterion score was based on the number of long-range jobs

anticipated from the project. Also included in the score were areas where points

were deducted: if the estimate of job stimulation was not documented, or if the

applicant indicated that the project would not be initiated within two years.

The funding criterion measured the financial commitment (in non-federal

funds, i.e., local, state or private) to the project. It is an indicator of the

applicant’s ability to initiate the project in a timely manner and the ability of the

project to leverage additional investment. It also awarded additional points to

applicants able to commit non-federal funds greater than fifty percent (50%) of

total project costs.

The income criterion was based on median family income within the host

municipality, favoring those communities with the lowest medians ((6)).

Six projects received high scores under the jobs criterion:

RIEDC/Bulkhead Replacement, Newport/Halsey Street Industrial Park

Expansion, Providence/Gorham Site Redevelopment, RIEDC/Pier 2 Structural

Repairs, RIEDC/CRIDCO/Ladd Center, and Cranston/Narragansett Brewery

Redevelopment.

Five projects received high scores under the funding criterion:

Providence/Heritage Harbor Museum, Newport/Halsey Street Industrial Park

Expansion, Providence/Gorham Site Redevelopment, Cranston/Narragansett

Brewery Redevelopment, and Woonsocket/Stadium Theater Restoration.

Four projects received high scores for the income criterion: Providence/

PPAC, Providence/Heritage Harbor Museum, and Newport/ Halsey Street

Industrial Park Expansion and Providence/Gorham Site Redevelopment. (See

Table 1.)

Question 3: How did the EDA funds awarded actually compare with the

amount on the OEDP or CEDS application?

Only one of the nine projects in this study, Cranston/Narragansett Brewery

Redevelopment, received the exact amount of EDA funding proposed in its

CEDS or OEDP application. Other projects, with the exception of

RIEDC/CRIDCO/Ladd Center and Woonsocket/Stadium Theater Restoration,

received considerably less.

In descending order, Newport/Halsey Street Industrial Park Expansion,

received 56 percent of the amount in its OEDP application, Providence/Gorham

Site Redevelopment received 43 percent, and RIEDC/Pier 2 Structural Repairs

received 40 percent, followed by Providence/PPAC, Providence/Heritage Harbor

Museum and RIEDC/Bulkhead Replacement, each receiving 33 percent.

9


Table 1

OEDP/CEDS PROJECTS IN RHODE ISLAND FUNDED BY THE EDA, 1996-2000

Applicant/Project

OEDP/CEDS

Scoring criteria Sources of Med. family % state med.

rank w/highest scores non-federal $ income, $* family income

Providence/PPAC #23/67 area/income private 28,342 72.4

Providence/Heritage Harbor Museum #32/81 income/funds state, private 28,342 72.4

RIEDC/Bulkhead Replacement #11/81 jobs/env. state 46,736 119.3

Newport/Halsey St. Ind. Park Expansion #17/41 jobs/income/funds private 37,427 95.5

Providence/Gorham Site Redev. #4/41 funds/jobs/income local, private 28,342 72.4

RIEDC/Pier 2 Structural Repairs #8/36 jobs/area state 46,736 119.3

RIEDC/CRIDCO/Ladd Center #2/36 jobs/area state, private 40,853 104.3

Cranston/Narragansett Brewery Redev. #8/30 jobs/funds/env. state, local, private 41,896 106.9

Woonsocket/Stadium Theater Restor. #1/30 funds/env./studies local, private 31,659 80.8

* 1990 Census, collected 1989. State median = $39,172

Source: Overall Economic Development Program (OEDP) and Comprehensive Economic

Development Strategy (CEDS) applications


The Ladd Center project was awarded $2,000,000 from the EDA, an

increase of 67 percent over its OEDP request. Woonsocket’s Stadium Theater

Restoration was awarded $450,000, an increase of 29 percent over its CEDS

request. (See Table 2.)

Table 2

EDA FUNDS:

COMPARISON OF OEDP/CEDS APPLICATIONS AND EDA GRANT AWARDS

Applicant/Project

EDA $, OEDP or

CEDS request

EDA $

awarded

Providence/PPAC 3,000,000 1,000,000

Providence/Heritage Harbor

Museum

3,000,000 1,000,000

RIEDC/Bulkhead Replacement 2,446,000 800,000

Newport/Halsey St. Ind. Park

Expansion

250,000 140,500

Providence/Gorham Site Redev. 2,000,000 864,900

RIEDC/Pier 2 Structural Repairs 2,472,000 1,000,000

RIEDC/CRIDCO/Ladd Center 1,200,000 2,000,000

Cranston/Narragansett Brewery

Redev.

Woonsocket/Stadium Theater

Restor.

1,000,000 1,000,000

350,000 450,000

Total 15,718,000 8,255,400

Source: Overall Economic Development Program (OEDP) and Comprehensive Economic

Development Strategy (CEDS) applications, 1995-1999, and U.S. Dept. of Commerce, Economic

Development Administration, Public Works Division

Question 4: How many projects had a share of the match from private

sources?

Seven out of the nine projects under study (78 percent) had funding

committed from private sources. They were Providence/PPAC, Providence/

Heritage Harbor Museum, Newport/Halsey Street Industrial Park Expansion,

Providence/Gorham Site Redevelopment, RIEDC/CRIDCO/Ladd Center,

11


Cranston/Narragansett Brewery Redevelopment, and Woonsocket/Stadium

Theater. (See Table 1.)

Question 5: Where were the projects located?

The projects under review were located in Providence, Cranston, North

Kingstown, Exeter, Newport and Woonsocket, and were in an Enterprise Zone or

an area of low median family income, or within the “built environment” in these

communities. (See Table 3.)

Table 3

LOCATION OF EDA-FUNDED PROJECTS

Municipality Applicant/Project Location

Providence Providence/PPAC Enterprise Zone, low income, built

environment

Providence Providence/Heritage Harbor Museum Enterprise Zone, low income, built

environment (former power house)

North Kingstown RIEDC/Bulkhead Replacement Built environment (Quonset

Davisville)

Newport

Newport/Halsey St. Ind. Park

Expansion

Low income, built environment

Providence Providence/Gorham Site Redev. Enterprise Zone, low income, built

environment (former factory site)

North Kingstown RIEDC/Pier 2 Structural Repairs Built environment (Quonset

Davisville)

Exeter RIEDC/CRIDCO/Ladd Center Built environment (former Ladd

School site)

Cranston

Cranston/Narragansett Brewery

Redev.

Enterprise Zone, low income, built

environment (former brewery site)

Woonsocket Woonsocket/Stadium Theater Restor. Enterprise Zone, low income, built

environment

Source: OEDP/CEDS applications, 1995-1999

12


Three of the funded projects were located in Providence:

Providence/PPAC, Providence/Heritage Harbor Museum, and Providence/

Gorham Site Redevelopment.

Two of the projects were located in North Kingstown: RIEDC/Bulkhead

Replacement and RIEDC/Pier 2 Structural Repairs.

One project each was located in Newport (Newport/Halsey Street

Industrial Park Redevelopment), Exeter (RIEDC/CRIDCO/Ladd Center),

Cranston (Cranston/Narragansett Brewery Redevelopment), and Woonsocket

(Woonsocket/Stadium Theater).

Assessment

The overall project score obtained from the Priority Project Rating System

is largely irrelevant in predicting which projects will be funded by the EDA. While

the score is important in determining whether a project will be on the Priority

Project List (it must attain the median score among all project proposals or

better), our survey shows that a project may be funded if it is at the very top of

the priority list, or if it scores only within the top 40 percent of all the projects

submitted.

However, certain scoring criteria used in the Rhode Island CEDS and

OEDP seem important to the EDA, as evidenced by high scores under the

following criteria being common to many of the projects gaining funding: jobs,

funds, and income.

The amount of funds sought from the EDA in the OEDP and CEDS

applications generally runs significantly higher than what is eventually granted.

With only one exception, EDA funding appeared capped at $1,000,000.

Evidence of matching funds drawn at least partly from private sources also

is important to the EDA. Only two projects in our survey did not have private

sector investment; both were located at the state-owned Port of Davisville, and

the match came solely from the state.

The Priority Project Rating System’s locational criteria, which are intended

to direct development toward economically distressed areas, seem to select

projects well. All projects in our survey were located within the built environment,

much of which has suffered from disinvestment as manufacturing and other jobs

moved overseas. Six of the nine projects were located in areas with low median

family incomes relative to the rest of the state, five in Enterprise Zones, and three

in areas designed to be regional centers (Quonset Davisville and Ladd Center).

13


Part Four:

PROJECT PERFORMANCE, ONCE FUNDED AND IMPLEMENTED

After receiving EDA funding and being implemented, how well did the

projects in our survey perform? The CEDS staff contacted project proponents

and consulted community employment and wage data from the R.I. Department

of Labor and Training (DLT). We needed to know:

• Did community (i.e., municipal) employment figures improve?

• What was the contribution of each project?

• How does this compare with figures anticipated from the OEDP and CEDS

applications?

• What was the impact of the project on wages?

• Has the project promoted other development?

Answers to these questions along with the trends we observed in Part

Three would answer questions about the CEDS itself. Does the program select

projects that reasonably fulfill their job generation goals? Does the program,

through the projects it selects, contribute to a general rise in employment and

wage levels? Do these projects perform up to expectations once they are

implemented? Are changes needed in the program?

Did community employment figures improve?

What was the contribution of each project?

To gain some measure of the impact of each project on local employment,

the staff compared the number of jobs reported by the projects’ proponents to

resident employment data for the corresponding years collected by the DLT.

We tracked changes in employment from the year of each project’s

funding (“project inception”) to 2003, presuming that, with administrative and

construction schedules, a project would not be completed and would not begin

generating long-term jobs until at least the year following funding ((7)). Under

this assumption, the project that was first in our survey chronologically – the

Providence Performing Arts Center Expansion – would begin hiring in 1997; the

last in our survey, the Narragansett Brewery Redevelopment and the Stadium

Theater Restoration, would begin in 2001.

We found that resident employment grew in the host communities from

1997 through 2003. This continued an upward trend dating back at least to

1995. (See Table 4.) Growth directly attributable to the projects ranged from

very modest to significant – eight jobs in Woonsocket for one, to more than 400

jobs in Cranston for another. In North Kingstown, employment from two

14


Table 4

ANNUAL AVERAGE RESIDENT EMPLOYMENT IN HOST COMMUNITIES

Municipality Change from # jobs reported

1995 1996 1997 1998 1999 2000 2001 2002 2003 project inception from projects

Cranston 34,875 36,238 36,985 37,565 38,483 38,459 38,396 38,802 40,089 1,630 415

Exeter 2,876 3,038 3,156 3,109 3,230 3,027 3,038 3,090 3,192 -38 0

N. Kingstown 12,808 13,525 14,032 14,278 17,650 13,859 13,826 13,992 14,456 424 246

Newport 10,543 11,214 11,801 11,539 12,156 13,250 13,419 13,469 13,990 2,451 0

Providence 64,460 66,804 68,102 67,770 69,067 75,580 75,188 75,575 78,082 11,278 339

Woonsocket 18,583 19,273 19,502 19,698 20,082 19,806 19,716 19,841 20,500 694 8

State of RI 470,985 491,551 503,885 505,132 519,216 520,253 520,337 525,157 542,798 51,247 1,008

Source: RIDLT, Annual Average Labor Force Statistics for Sub-state Areas, not seasonally adjusted, http://www.dlt.ri.gov/lmi/laus/town/town.htm


projects in the Quonset Davisville industrial park may have helped offset resident

job losses from 1999 to 2001.

Altogether, the projects we surveyed generated 1,008 direct jobs from

1997, the year the first project would have begun hiring, to 2003, compared to a

statewide growth in resident employment of 51,247.

Establishment employment

While the projects no doubt employed local residents, the staff

acknowledged that employment opportunities at project sites were not limited to

workers from the host city or town. We concluded that establishment

employment data might give a more accurate impression of a project’s economic

impact. The staff examined establishment employment data with the same

comparisons and assumptions used for resident employment. The source of

these data again was the DLT, although in this instance data were available only

through 2002 and included only private sector employment. The latter was

presumed not to be a problem, as the jobs reported by the projects’ proponents

were limited to the private sector.

The data show that two communities – Providence and Woonsocket –

registered citywide losses in establishment employment at the time the

OEDP/CEDS projects were being implemented. North Kingstown, which

registered losses in resident employment from 1999 to 2001, experienced a

growth in establishment employment from 1996 through 2002. The two

Davisville projects funded during this period contributed 246 jobs to the town’s

total growth, 3,068, or about eight percent. (See Tables 5 and 6.)

Statewide, establishment employment grew by 23,244 from 1997 to 2002.

The 1,008 jobs contributed by the projects amount to 4.3 percent of this total.

How do the actual job generation figures compare with those anticipated

from the OEDP and CEDS applications?

In all but one case the number of jobs generated by the projects surveyed

were lower than the OEDP or CEDS estimates. (See Table 6, second page

following.) However, in spite of the grants being officially concluded, many of the

projects are still in various stages of development so the results are incomplete.

For example:

• The Gorham Site Redevelopment is expected to add 140 jobs when the

new Providence YMCA is completed and staffed ((8)).

• Expansion of the new Katherine Gibbs School located at the site of the

16


Table 5

ANNUAL AVERAGE ESTABLISHMENT EMPLOYMENT IN HOST COMMUNITIES

Municipality Change from # jobs reported

1995 1996 1997 1998 1999 2000 2001 2002 project inception from projects

Cranston 25,188 25,666 26,710 26,651 27,578 28,343 28,224 28,416 73 415

Exeter 676 727 723 729 757 786 767 836 79 0

N. Kingstown 9,093 8,344 8,691 9,435 9,785 9,941 10,362 11,412 2,721 246

Newport 11,657 12,145 12,189 11,975 11,950 12,397 13,084 12,674 699 0

Providence 99,863 99,400 99,227 99,490 99,792 102,111 101,026 97,381 -2,019 339

Woonsocket 13,345 13,588 13,413 13,725 13,290 13,155 13,363 13,254 99 8

State of RI 373,962 374,685 380,835 387,796 395,670 404,720 405,051 404,079 29,394 1,008

Source: RIDLT, Annual Average Private Sector Employment by City & Town, A Decade of Change in Rhode Island: An Analysis of Private

Sector Employment in the Ocean State, 1992-2002


Table 6

DIRECT EMPLOYMENT GENERATED BY EDA-FUNDED PROJECTS, 1996-2000

Applicant/Project EDA funds # jobs # jobs EDA $/job Notes

awarded, $ expected generated

Providence/PPAC 1,000,000 20 127 7,874 56 additional indirect/induced jobs confirmed by independent study

Providence/Heritage Harbor Museum 1,000,000 500 19 52,632 Museum not yet open; jobs administrative

RIEDC/Bulkhead Replacement 800,000 300 123 6,504 With Pier 2 project, considers total Davisville employment of 269

Newport/Halsey St. Ind. Park Expansion 140,500 60 0 N/A No new jobs as result of project, but 256 jobs retained at park

Providence/Gorham Site Redev. 864,900 2,000 193 4,481 YMCA to be built on site expected to add 140 jobs

RIEDC/Pier 2 Structural Repairs 1,000,000 350 123 8,130 With bulkhead project, considers total Davisville employment of 269

RIEDC/CRIDCO/Ladd Center 2,000,000 500 0 N/A 100-105 employees expected at Job Corps site, only tenant so far

Cranston/Narragansett Brewery Redev. 1,000,000 1,000 415 2,410 Further development of site anticipated

Woonsocket/Stadium Theater Restor. 450,000 17 8 56,250 One (1) additional job retained as result of project

Total 8,255,400 4,747 1,008 8,190

All employment figures current to 2003. Jobs expected or generated do not include indirect and induced employment (multiplier effects).

Sources: Kathryn Calnan, Providence Performing Arts Center; Roberta Bell Hourigan, Heritage Harbor Museum; Nancy Carrott, RIEDC; Alan Goodwin, City of Newport;

Michael Lepore, City of Providence; Linda Soderberg, RI Dept. of Labor & Training; David Maher, City of Cranston; Joel Mathews, City of Woonsocket


Narragansett Brewery Redevelopment will add administrative and

professional employment. The school currently accounts for about 25

percent of the 415 jobs associated with the redevelopment. That site also

includes a former trolley barn with renovation and reuse potential,

although to date nothing definite has been proposed ((9)).

• The Ladd Center’s redevelopment has proceeded as far as the

construction of a Jobs Corps training facility that will support 100 to 105

full-time positions (instructors and administrative staff), according to the

latest estimates. The facility will open in the fall of 2004 ((10)).

• The Heritage Harbor Museum completed the exterior repairs covered in

their work program under the grant. The Museum, however, has not yet

opened to the public, though it has sponsored traveling exhibits with

others, such as the Smithsonian Institution. Current employment at the

Museum consists of a relatively small crew of administrative personnel

((11)).

• The Halsey Street Industrial Park Expansion project led to the construction

of a new road providing access to what was essentially a stranded piece

of property that the City of Newport was, and still is, looking to develop.

The anticipated expansion of the industrial park, the Tradesmen Center,

onto that property did not occur, however, so no new jobs could be

reported to the EDA. On the other hand, the project did result in improved

highway access for the Tradesmen Center and a re-directing of

commercial traffic away from a residential area, arguably ensuring the

survival of the Tradesmen Center as an industrial park and the retention of

256 jobs there ((12)).

A total of $8,255,400 of EDA funding was awarded to the nine projects we

reviewed ((13)). Of the 4,747 jobs anticipated in the CEDS applications, as of

2003 the projects had generated only 1,008 jobs. This is an average of $8,190

per job ((14)). (See Table 6.)

What was the impact of the projects on wages?

Review of average private-sector wages in Rhode Island from 1995 to

2002 shows a significant trend upward — from $25,269 to $33,226, an increase

of 31.5% ((15)).

To determine whether the projects had an impact on the statewide allindustry

average from the employment and wages they supported, the staff

identified the affected industries by Standard Industrial Classification (SIC) code

and tabulated wages reported by the DLT for those codes. It was presumed that

19


the wages generated by the projects were equivalent to the average wages

reported in these industries, ignoring the likelihood that new workers would be

paid starting wages for that industry. (Those rates were not available.)

Table 7 shows employment and wages by SIC code over the eight-year

period. These data are plotted in Figure 1, second page following. The wage

numbers were not adjusted for inflation.

The data show that most of the SIC categories connected with the projects

paid wages that were lower than the average for private-sector wages in Rhode

Island (the “all-industry” average). Employment derived from the projects might

therefore be expected to depress the all-industry average, the decrease being

noticed in the sample period.

From 1995 to 2002, however, the all-industry average tracked consistently

upward, virtually in a straight line, the slope of that line apparently unaffected as

the projects began hiring (Figure 1). This indicated that the overall impact of

project-generated wages on the all-industry average wage was negligible,

certainly never sufficient to cause a decrease in that average.

Apparently wages in all the affected SIC categories tended upward. Some

industries showed more dramatic wage growth than others. Some industries

tracked consistently upward, like the all-industry average, while others had

instances of growth and decline. The declines and “flat spots” did not affect the

long-term trend of the all-industry average.

None of these trends could be correlated with the inception and

implementation of any of the nine projects in our survey.

Have the projects promoted other development?

Economic multipliers have been ignored to this point. Practitioners

routinely use multipliers to determine the full impact of a project on the state’s

economic output, household earnings and employment. This is one means of

estimating the extent to which the project will promote other development.

The multipliers derived from the Department of Commerce’s Regional

Input-Output Modeling System (RIMS) are specific to each state, and to each

industrial group represented in the state. Many Rhode Island practitioners are

familiar with the RIMS model and use it for economic analysis. One set of RIMS

multipliers can be used to determine the indirect and induced employment

resulting from jobs established at a project site (direct effect); another set will

calculate additions to household earnings and employment from the cost of the

project in dollars (final demand) ((16)).

20


Table 7

AVERAGE EMPLOYMENT AND WAGES IN AFFECTED INDUSTRIES, 1995-2002

Year SIC code Description Employment Avg. ann. wage Projects funded (w/related SIC)

1995 Total All private sector industries 373,963 $25,269

17 Special trade contractors 8,490 $28,750

449 Services incidental to water transportation 438 $26,050

59 Miscellaneous retail 13,063 $20,226

792 Theatrical producers, bands… 501 $14,303

824 Vocational schools 315 $20,298

841 Museums and art galleries 438 $13,568

1996 Total All private sector industries 374,685 $26,124

17 Special trade contractors 8,750 $29,722

449 Services incidental to water transportation 465 $26,826

59 Miscellaneous retail 13,000 $21,117

792 Theatrical producers, bands… 513 $14,519 Expansion of PPAC

824 Vocational schools 321 $22,248

841 Museums and art galleries 444 $13,749

1997 Total All private sector industries 380,835 $27,473

17 Special trade contractors 9,451 $31,537

449 Services incidental to water transportation 489 $28,221 Bulkhead Replacement

59 Miscellaneous retail 13,507 $21,744

792 Theatrical producers, bands… 568 $15,117

824 Vocational schools 345 $22,270

841 Museums and art galleries 458 $14,461 Heritage Harbor Museum

1998 Total All private sector industries 387,791 $28,948

17 Special trade contractors 10,238 $32,988 Halsey St. Ind. Park Expansion

449 Services incidental to water transportation 521 $26,891

59 Miscellaneous retail 13,907 $23,329 Gorham Site Redevelopment

824 Vocational schools 343 $24,397

792 Theatrical producers, bands… 574 $16,620

841 Museums and art galleries 487 $14,938

1999 Total All private sector industries 395,670 $29,902

17 Special trade contractors 11,684 $35,721

449 Services incidental to water transportation 510 $28,025 Pier 2 Structural Repairs

59 Miscellaneous retail 15,118 $24,788

792 Theatrical producers, bands… 673 $15,410

824 Vocational schools 366 $27,016

841 Museums and art galleries 594 $15,849

2000 Total All private sector industries 404,720 $31,209

17 Special trade contractors 12,277 $37,934

449 Services incidental to water transportation 567 $27,405

59 Miscellaneous retail 16,041 $30,173 Narragansett Brewery Redev.

792 Theatrical producers, bands… 748 $15,955 Stadium Theater Restoration

824 Vocational schools 387 $29,514 Narragansett Brewery Redev.

841 Museums and art galleries 614 $17,325

2001 Total All private sector industries 404,970 $32,186

17 Special trade contractors 12,576 $39,180

449 Services incidental to water transportation 597 $29,532

59 Miscellaneous retail 16,488 $28,124

792 Theatrical producers, bands… 764 $16,408

824 Vocational schools 388 $30,144

841 Museums and art galleries 690 $17,122

2002 Total All private sector industries 404,079 $33,226

17 Special trade contractors 12,591 $39,855

449 Services incidental to water transportation 616 $30,819

59 Miscellaneous retail 16,390 $27,073

792 Theatrical producers, bands… 844 $17,434

824 Vocational schools 358 $30,122

841 Museums and art galleries 652 $18,889

Source: RIDLT, Quarterly Census of Employment and Wages (ES-202),

http://www.dlt.ri.gov/lmi/es202.sicdata.htm

21


Figure 1

AVERAGE ANNUAL WAGES IN AFFECTED INDUSTRIES

$45,000

$40,000

$35,000

Avg. annual wages

$30,000

$25,000

$20,000

$15,000

All industries

Special trade contractors

Misc. retail

Water transp. services

Theatrical producers

Vocational schools

Museums & art galleries

$10,000

$5,000

$0

1995 1996 1997 1998 1999 2000 2001 2002

Year

Source: RIDLT, http://www.dlt.ri.gov


Multiplier effects: Cumulative impact

The EDA has been advised that, overall, the multiplier associated with its

public works projects is about 1.5 ((17)). In other words, for every two direct jobs

created by public works funds another indirect or induced job is created. That

would mean that the 1,008 direct jobs generated by Rhode Island projects

funded from 1996 to 2000 resulted in 504 additional (indirect or induced) jobs:

1,008 direct jobs x 1.5 = 1,512 total R.I. jobs

1,512 total jobs – 1,008 direct jobs = 504 indirect and induced jobs

The qualifier “overall” indicates that this multiplier is a national average.

We concluded that the estimate might understate the impact in Rhode Island. To

test this, we applied the RIMS direct-effect employment multipliers to each of the

projects the EDA funded, identifying their industrial groups and direct

employment first and then calculating the total number of jobs generated. The

results are shown in Table 8. We found that the EDA’s estimate compared quite

favorably with our own, which showed the 1,008 direct jobs resulting in 573

indirect and induced jobs, for a total of 1,581 Rhode Island jobs.

These 1,581 jobs are all post-construction. Construction-related

employment was calculated using the RIMS final-demand multiplier for “new

construction” or “maintenance and repair construction,” depending on the project

(see Table 9, second page following). We found a total of 729 jobs supported as

these nine projects were being built, for a grand total of 2,310 direct, indirect and

induced jobs, construction and post-construction.

Multiplier effects: A case study

One local study using the RIMS model exhaustively explored what

ultimately became an OEDP/EDA project – the Providence Performing Arts

Center Expansion. The CEDS staff used it in this report to document job

generation from this project.

Renovations to the Performing Arts Center were deemed necessary to

restore PPAC, the centerpiece of Providence’s nascent “Arts District,” and to

draw business and activity to an otherwise depressed downtown area. To keep

the theater vital, the project’s proponents concluded it would need to be

expanded to be able to handle popular Broadway shows such as Miss Saigon

and Phantom of the Opera. The Performing Arts Center commissioned the

Corporate Economics Department of Fleet Financial Group to do an economic

analysis of bringing such a show to Providence ((18)).

23


Table 8

EMPLOYMENT MULTIPLIER EFFECTS OF EDA-FUNDED PROJECTS, 1996-2000

Applicant/Project # direct jobs Industry group Direct-effect Total # jobs

generated empl. Multiplier generated

Providence/PPAC 127 Amusements 1.4410 183

Providence/Heritage Harbor Museum 19 Misc. services 1.5828 30

RIEDC/Bulkhead Replacement 123 Transportation 1.7528 216

Newport/Halsey St. Ind. Park Expansion 0 New construction 2.3568 0

Providence/Gorham Site Redev. 193 Retail trade 1.4900 288

RIEDC/Pier 2 Structural Repairs 123 Transportation 1.7528 216

RIEDC/CRIDCO/Ladd Center 0 Business services 1.6785 0

Cranston/Narragansett Brewery Redev. 311 Retail trade 1.4900 463

104 Business services 1.6785 175

Woonsocket/Stadium Theater Restor. 8 Amusements 1.4410 12

Total 1,008 1,581

All employment figures current to 2003.

Source: U.S. Dept. of Commerce, Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System

(RIMS II) (1992)


Table 9

CONSTRUCTION MULTIPLIER EFFECTS OF EDA-FUNDED PROJECTS, 1996-2000

Applicant/Project EDA funds Non-federal Total project Industry group Final-demand Total # jobs

awarded, $ match, $ cost, $ empl. multiplier generated

(per $1,000,000)

Providence/PPAC 1,000,000 1,971,538 2,971,538 New construction 30.1 89

Providence/Heritage Harbor Museum 1,000,000 2,780,000 3,780,000 Maintenance/repair 31.3 118

RIEDC/Bulkhead Replacement 800,000 476,830 1,276,830 Maintenance/repair 31.3 40

Newport/Halsey St. Ind. Park Expansion 140,500 162,500 303,000 New construction 30.1 9

Providence/Gorham Site Redev. 864,900 834,807 1,699,707 New construction 30.1 51

RIEDC/Pier 2 Structural Repairs 1,000,000 1,006,000 2,006,000 Maintenance/repair 31.3 63

RIEDC/CRIDCO/Ladd Center 2,000,000 2,800,000 4,800,000 New construction 30.1 144

Cranston/Narragansett Brewery Redev. 1,000,000 1,000,000 1,500,000 New construction 30.1 45

500,000 New construction 30.1 15

Woonsocket/Stadium Theater Restor. 450,000 4,450,000 4,900,000 Maintenance/repair 31.3 153

Total 8,255,400 15,481,675 23,737,075 729

All employment figures current to 2003.

Source: U.S. Dept. of Commerce, Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS II) (1992)


Two studies were performed, in 1992 (years before the theater’s

expansion occurred) and 1996. The first study considered a hypothetical sevenweek

run of Phantom. It predicted a total impact of $7,641,782 from ticket

revenues, performers’ and patrons’ expenses, and local employment. According

to the multipliers generated by the RIMS model, this translates to 312 direct,

indirect and induced jobs ((19)).

The second study assessed actual sales and attendance figures when

Phantom played PPAC for six weeks, the number of performers in the company,

and records of spending by the company. The total impact was $4,493,131

((20)), or 183 direct, indirect and induced jobs by the RIMS multipliers.

To calculate direct jobs only, the number from the second study was

divided by the RIMS direct-effect employment multiplier. The result was 127

jobs. These may be considered new jobs as they result from the staging of

Phantom, which would not have been possible without the theater’s expansion.

This compares to the PPAC estimate in its EDA application of 95 jobs retained

plus 75 jobs added by the expansion, and the original CEDS estimate from the

City of Providence of 20 jobs “stimulated.” In this one case, the completed

project outperformed the CEDS estimate by more than 600 percent.

Assessment

Project solicitations over the years have attracted different numbers of

proposals. During the survey period, the range was 30 (in 1999) to 81 (in 1996).

Every year, the staff determined the median score among the proposals and

used it as a cutoff for that year’s priority list. However, as Part Three of this

paper shows, the projects that were funded by the EDA did not necessarily have

the highest CEDS scores on the list. Moreover, the projects with the highest

CEDS scores did not necessarily turn out to be the highest performing in terms of

jobs and wages. This is shown on Table 10.

Job generation

The numbers of jobs generated from the nine projects in our survey were

lower than expected, given the estimates submitted with the OEDP and CEDS

applications. One explanation may be that most of the applications – six out of

the nine – did not back up their job estimates with documentation. At least one

applicant based his estimate on the anticipated floor space the project would

occupy and a corresponding “industry standard” for the number of employees per

square foot. The actual project footprint turned out smaller than envisioned and

the job estimate exaggerated.

26


Table 10

PROJECT RANKING AND PERFORMANCE

Year in OEDP Year EDA funded Applicant/Project Scoring rank # direct jobs Avg. ann. wage

or CEDS in OEDP/CEDS generated in SIC, 2002*

1995 1996 Providence/PPAC #23/67 projects 127 $17,434

1996 1997 Providence/Heritage Harbor Museum #32/81 projects 19 $18,889

1996 1997 RIEDC/Bulkhead Replacement #11/81 projects 123 $30,819

1997 1998 Newport/Halsey St. Ind. Park Expansion #17/41 projects 0** $39,855

1997 1998 Providence/Gorham Site Redev. #4/41 projects 193 $27,073

1998 1999 RIEDC/Pier 2 Structural Repairs #8/36 projects 123 $30,819

1998 1999 RIEDC/CRIDCO/Ladd Center #2/36 projects 0*** $30,122

1999 2000 Cranston/Narragansett Brewery Redev. #8/30 projects 311 retail $27,073

104 voc. ed. $30,122

1999 2000 Woonsocket/Stadium Theater Restor. #1/30 projects 8 $17,434

* Annual all-industry private sector average, 2002, was $33,226

** No new jobs, but 256 jobs retained in area

*** 100-105 jobs anticipated at Job Corps Center by fall 2004


However, three of the nine projects did provide documentation in the form

of a study, consultant’s report or master plan. These estimates were arguably

the most reasonable, or best possible, at the time. In such cases it is difficult to

fault the applicants for job estimates that later proved inaccurate. Also, we

observed that many of these projects are still in the process of being

implemented (in other words, still hiring). Review of these projects at a later date

may be worthwhile to see if the anticipated numbers are reached.

While the employment gains were less than expected, in at least one city

they apparently helped cushion significant losses in establishment employment.

In Providence, the restoration of the Providence Performing Arts Center, the

establishment of the Heritage Harbor Museum and the redevelopment of the

Gorham site together added 339 direct jobs from 1996 to 2002. During this

period Providence as a whole lost 2,019 jobs. Without the benefit of these

projects, the loss would have been more than 2,350 jobs – about 14 percent

higher – not considering the additional jobs generated by multiplier effects.

In another city, Cranston, a project contributed enough to establishment

employment to turn a citywide loss of jobs into a small gain. The redevelopment

of the Narragansett Brewery site added more than 400 direct jobs at a time when

Cranston as a whole gained only 73 jobs.

Wages

The nine projects did not seem to affect trends in average wages in Rhode

Island. In hindsight, negligible impact at so gross a scale as the all-industry

average is logical, given the projects account for 1,008 jobs and the all-industry

average was based on more than 404,000 in 2002.

The wage question appears to be better handled qualitatively – that is,

whether wages generated by OEDP or CEDS projects fall above or below the allindustry

average. As mentioned above, the jobs stimulated by the projects

funded in Rhode Island from 1996 to 2000 were concentrated in SIC codes

typically paying below that average.

The exception is the project that resulted in the extension of Halsey Street

in Newport. While no new jobs were reported for that project, the existing jobs at

the Tradesmen’s Center reside in an SIC category (special trade contractors)

with wages that were not only consistently higher than the all-industry average,

but grew at a greater rate from 1995 to 2002. If we presume that the survival of

the Tradesmen’s Center was attributable to the Halsey Street project, this finding

is a far more desirable outcome than generating jobs that pay below the allindustry

average.


In the years subsequent to our survey, the CEDS Subcommittee added a

category to the jobs criterion that awarded points for projects that would result in

wage scales at least 150 percent higher than the state’s minimum wage. A more

stringent standard could be substituted for minimum wage, for example the

Rhode Island all-industry average for the most recent year for which data are

available. In 2002, according to the DLT, the state’s average wage for covered

employment was $34,781; minimum wage was $12,792.

Promoting other development

The CEDS staff relies on economic multipliers to gauge project impact and

in recent years has asked CEDS applicants to consider multiplier effects in their

job estimates. A table of RIMS multipliers is now supplied in every application

package so that every project can be compared by the same model.

The job numbers reported in this paper are direct employment only,

except where we explicitly state multiplier effects. The spin-off we report

corresponds closely with EDA’s catchall public works multiplier, 1.5 – i.e., one

additional job for every two generated directly by the projects. This suggests

satisfactory but average performance in promoting other development. In total,

the projects were directly responsible for 1,008 Rhode Island jobs, plus 573 that

were indirect or induced (“other development”). This does not count employment

generation during construction, which our numbers show is significant (another

729 jobs).


Part Five:

RECOMMENDED CHANGES IN THE CEDS APPLICATION PROCESS

As part of our continuous planning process, the CEDS Committee

continuously refines and revises the project proposal screening criteria so that

the projects selected for the Priority List reflect and effectively implement the

state’s economic development objectives as outlined in the CEDS 5 Year Update

and the annual reports.

Since 1999, the point-based CEDS Priority Project Rating System has

been revised to promote smart growth, focus on redeveloping brownfields and

idled industry facilities, recruit residents of Enterprise Zones to the workforce,

and concentrate on areas with low per capita income. The system also gives

credit to projects that use technologies that reduce consumption of natural

resources or waste streams, or that locate in a national or state historic district or

on a property individually listed on the national or state historic register. Points

will be given if an applicant has contacted the EDA and has been invited to

submit a pre-application, or partnered with other eligible applicants.

In addition, the range of point awards has been reduced under the income

criterion, so that credit is only given for per capita income levels within the EDA’s

threshold requirements. In recognition of the EDA’s Investment Policy

Guidelines and our own economic development objectives, points are awarded to

projects that result in wages well above the state minimum and that build

industrial clusters.

Applicants are no longer required to assign a priority if they submit more

than one project, and, as a requirement to participate in the CEDS, the

community in which a project is located now must have an approved

Comprehensive Plan.

The question remains whether the economic benefit anticipated from

EDA-funded projects is obtained – employment at decent wages in economically

distressed areas, with a strong commitment from local officials and the private

sector – in the projects the CEDS selects. We also need to continue evaluating

how well the CEDS process is working in soliciting and selecting projects likely to

be funded by the EDA.

Findings: Funded projects

Nine projects were funded between 1996 and 2000, which is about 1.8

projects a year. Rhode Island’s experience continues to be that, of the twenty or

more proposals making the Priority Project List each year, only two or three at

most are funded. It is unclear if this disappointing number is due to an EDA


funding allocation formula for the amount of money available for Rhode Island, or

if the projects on the priority list not receiving funding fail to address EDA’s

Investment Policy Guidelines to EDA’s satisfaction, or if there is some other

reason, yet to be determined. Only one project in our survey received all of the

funds originally requested; most received considerably less.

Recommendations

1. Determine, to the extent possible, if there is a conflict between the

EDA’s funding selection criteria and the state’s screening criteria.

2. Explore changing the state’s scoring and screening method from a

numeric, short answer format to one based upon narrative project descriptions as

they relate to the criteria we select for project evaluation.

3. Involve the CEDS Subcommittee in the selection of projects to be

included on the priority list to a greater degree than formerly by having the

Subcommittee actually read, compare and evaluate projects pre-selected by staff

and then decide, using professional judgment, which of the pre-selected projects

should be submitted to EDA as the priority list.

4. Encourage regional partnering initiatives among many applicants to

broaden a project’s scope and quality.

5. Encourage applicants to familiarize themselves with the EDA’s

Investment Policy Guidelines before submitting their applications.

Findings: Job generation

This study tracked nine projects funded over a five-year period, 1996-

2000. All of the projects in this study have either created or retained jobs but not

to the extent indicated in their applications. Some of the projects are in various

stages of development, making it difficult to assess their full impacts, especially

in the job generation category. Overall, however, the projects have not met the

job generation numbers projected by the applicants.

Recommendations

1. Track the funded projects over a longer period, perhaps 15 years, to

detect impacts that are not evident over a five-year period (too brief?), or do a

follow-up study of these nine projects in five years.

2. Study the projects on the priority list that did not receive funding during

this five-year study period and determine whether they have been able to be

completed, and if so, what the employment levels are.


3. Study the projects not making the priority list and determine if they

were completed and what their employment levels are. Compare the results of

the three studies.

4. Determine why the applicants are over-estimating the job generation

numbers and make the necessary adjustments to the CEDS application materials

and requirements.

5. Require applicants to submit applications expecting to generate no

less than 50 jobs.

Findings: Wages

The jobs stimulated by the projects funded in Rhode Island by the EDA

typically were concentrated in industries paying below the all-industry average.

Recommendations

1. Redefine “well-paying” jobs by changing the wage category in the jobs

criterion from a minimum wage-based formula to either a state per capita

income-based, or an all-industry average salary-based, formula.

2. Revise clusters to include those recommended by the R.I. Economic

Development Corporation providing high-skill, high-wage jobs, such as health

and life sciences, high-tech progressive manufacturing, creative advertising and

media, information technology and telecommunications, building trades, and

consumer goods.

3. Give applicants additional points if the project includes jobs in highskill,

high-wage ($40,000 per year or greater) clusters.

Other findings

Although seven of the nine funded projects in our survey scored high on

the private funding criterion, this factor did not contribute significantly to the

projects’ ability to generate the promised number of jobs paying good wages. It

probably helped get the projects selected for EDA funding, showing that this

criterion is necessary, but it is insufficient for augmenting Rhode Island’s

economic development efforts as they relate to the CEDS process.


NOTES AND REFERENCES

1. See Appendix A for an explanation of the CEDS Priority Project Rating

System, which sets forth the criteria under which projects are scored.

2. The basic eligibility requirements for the EDA’s Public Works and

Development Facilities Grants are as follows (only one need apply):

(1) An unemployment rate at least one percentage point greater than

the national average unemployment rate;

(2) Per capita income that is 80 percent or less of the national

average per capita income;

(3) A special need, as determined by the EDA, arising from actual or

threatened severe unemployment or economic adjustment

problems resulting from changes in economic conditions such as

a. Substantial outmigration or population loss;

b. Underemployment;

c. Military base closures or realignments, defense contractor

reductions-in-force, or Dept. of Energy (USDOE) defenserelated

funding reductions;

d. Natural or other major disasters or emergencies;

e. Extraordinary depletion of natural resources;

f. Closure or restructuring of industrial firms, essential to

area economies; or

g. Destructive impacts of foreign trade.

EDA regulations also allow an area that does not meet any of the above

requirements to be eligible for assistance if a substantial direct benefit

(“significant employment opportunities for unemployed, underemployed or

low-income residents”) can be demonstrated to an area that does meet

them.

3. To date, the Rhode Island CEDS has acknowledged the EDA’s eligibility

requirements by favoring, through its scoring criteria, projects located in

Enterprise Zones (which must meet distress criteria reflecting population

loss, unemployment and disinvestment) and in areas with low income.

Projects not meeting these criteria have not been excluded from

participating in the program, however; they have simply achieved lower

scores and may still have qualified for a place on the Priority Project List.

The EDA’s eligibility requirements are not to be confused with the

agency’s Investment Policy Guidelines, which speak to partnerships,

cluster development, private sector involvement, and other factors better

termed “enhancements” to the grant rather than thresholds that must be

met first. The CEDS scoring criteria have more correspondence with the


EDA’s investment guidelines than with the eligibility requirements. This

may explain why some high-scoring projects in the Rhode Island CEDS

were later disqualified by the EDA for not meeting eligibility requirements.

4. The Ladd Center Infrastructure project was completed but the

development of a technology park at the site did not occur as anticipated

in both the CEDS and EDA applications. However, a Jobs Corps training

institute that was to be a tenant of the park is under construction there,

consistent with the original CEDS proposal, and is expected to open in the

summer or fall of 2004.

5. The OEDP/CEDS staff did not, and does not provide project scores and

rankings other than the priority listing to the EDA. By asking this question

we assessed how well our in-house selection criteria (the scoring process)

seemed to correspond with the EDA’s. “Perfect” correspondence would

result in only the top-scoring projects getting funded (i.e., those at least in

the top ten percent), presuming all proponents follow up their CEDS

applications with applications to the EDA. These results suggest the

correspondence was less than perfect, and variable over the years.

6. The jobs criterion has since been revised to add a wage factor. This

considers the average wage of the jobs directly supported by the project in

addition to the number of jobs, and how well these wages compare to (i.e.,

exceed) the state’s minimum wage. Projects leading to direct jobs with

the highest wages are awarded the most points, in theory promoting a

gain in the average Rhode Island wage, industry-wide, through the CEDS.

Another revision that occurred in the years subsequent to when the

projects in our survey were funded changed the income criterion from

median family income to per capita income (PCI), the PCI of the U.S.

Census tract in which the project is located. The CEDS income criterion

now compares directly to the threshold criterion the EDA uses for

screening applications – an income level equal to 80 percent or less of the

national average PCI. In the Priority Project Rating System, projects

located in tracts with the lowest PCIs relative to the national average gain

the most points. These tracts may be located in a municipality that overall

has a median family income higher than the state median. The

neighborhood in which the Cranston/Narragansett Brewery

Redevelopment project is located is one example.

7. The number of jobs reported was the number of new jobs resulting from

the projects, and did not include those generated temporarily during

construction or jobs already existing that were retained. Every reference

to “jobs generated” or “employment generated” pertains to new jobs only.


8. Greater Providence Young Men’s Christian Association, “The New

Providence YMCA, the Village of Promise on Mashapaug Pond,” 2003

CEDS Submission. The figure is for “year 1” and is based on a YMCA

Operations Team analysis dated March 2003.

9. David Maher and Michael DeLuca, personal communication.

10. Linda Soderberg, personal communication.

11. Roberta Bell Hourigan, personal communication.

12. Alan Goodwin, personal communication.

13. For the sake of comparison, in the period June 18-24, 2004, the EDA

announced $3,660,671 in construction grants that were expected to result

in 591 new jobs, a cost of $6,194 per job. These are anticipated jobs, of

course, and actual job generation once the projects are completed may be

lower as we found in our research.

14. Stephen Grady, personal communication.

15. R.I. Department of Labor and Training, A Decade of Change in Rhode

Island: An Analysis of Private Sector Employment in the Ocean State,

1992-2002 (available on-line).

16. U.S. Department of Commerce, Economics and Statistics Administration,

Bureau of Economic Analysis, Regional Multipliers: A User Handbook for

the Regional Input-Output Modeling System (RIMS II) (Washington, DC:

U.S. Government Printing Office, 1992). See Appendix B for a sample

calculation of multiplier effects.

17. Burchell, Robert W., Naveed A. Shad, and William R. Dolphin, Public

Works Program Multipliers and Employment-Generating Effects, EDA

Project No. 99-06-07415 (Washington, DC: Economic Development

Administration, U.S. Department of Commerce, 1998).

18. Ciminaro, Gary L., Fleet Financial Group, PPAC Economic Impact

Analysis Estimate (Providence, RI: Fleet Financial Group Corporate

Economics Department, 1992).

19. In the case of the Providence Performing Arts Center, direct jobs would

take in employment at the theater and in the performance company;

indirect jobs would include employment connected with lodging and meals

for the performers, suppliers of lumber and other materials for the sets,

and printers of tickets, programs, and advertising; and induced jobs would

include wait staff at restaurants catering to theater patrons, parking lot


attendants, convenience store employees, etc. These are all included in

the 312 jobs calculated using the RIMS multipliers for the industry group

that includes theaters and live performances – “hotels and lodging places

and amusements.”

20. Ciminaro, Gary L., independent economic advisory, May 4, 1996.


Appendix A:

SUMMARY OF OEDP/CEDS PRIORITY SYSTEM FOR RANKING PROJECTS,

1995-1999

A. Total System - Maximum Points 170. (Each project ranking criterion is explained in

detail on second page following.)

1. Job Development Points: 25 maximum

Long range job stimulation costs per job are:

a. $1-$15,000 25

b. $15,001-$30,000 15

c. $30,001-$45,000 10

d. $45,001-$60,000 5

e. $60,001 or more 0

If estimate of long range job stimulation is not backed up by a study

or other documentation -- Deduct 5 points

If project will not be initiated within two years -- Deduct 5 points

2. Area of Influence Points: 15 maximum

a. Statewide 15

b. Regional 10

c. Local only 5

3. Environmental Factors Points: 40 maximum

a. Project uses a technology that reduces existing consumption of 15

natural resources and/or reduces existing waste streams in the

production of a good or service.

b. Project results in rehabilitation of brownfield sites or reuse of 15

certified mill buildings.

c. Project contributes to meeting a specific environmental objective 10

listed in an element of the State Guide Plan.

d. Project results in use and/or revitalization of existing built 10

environment or existing infrastructure other than brownfields and

certified mill buildings.


4. Essential Project Studies and Permits Points: 25 maximum

a. All permits obtained, or confirmation obtained from regulatory 15

agencies that no permits are required.

b. Essential project studies completed. 10

c. Applicant has applied for but not yet obtained all necessary 5

permits.

d. Applicant has initiated essential project studies. 5

e. Applicant has not applied for permits. 0

f. Applicant has not initiated essential project studies. 0

5. Commitment of Non-Federal Funds Points: 20 maximum

a. Non-federal funds committed or appropriated 10

b. Non-federal funds from private investment 5

c. Non-federal funds exceed fifty percent of project costs 5

d. Non-federal funds not yet available 0

6. Employment of Substate Employment Growth Area Points: 10 maximum

a. Decreases of 8.0 percent or more per year 10

b. Decreases of 6.0-7.9 percent per year 9

c. Decreases of 4.0-5.9 percent per year 8

d. Decreases of 2.0-3.9 percent per year 7

e. Decreases of 0.1-1.9 percent per year 6

f. No change to increase of 1.9 percent per year 5

g. Increases of 2.0-3.9 percent per year 4

h. Increases of 4.0-5.9 percent per year 3

i. Increases of 6.0-7.9 percent per year 2

j. Increases of 8.0 percent or more per year 1

7. Labor Surplus Area Points: 5 maximum

Project is located in a designated labor 5

surplus area


8. Enterprise Zone Points: 5 maximum

Project is in a state-designated enterprise zone 5

9. Income Points: 15 maximum

a. Less than $27,000 15

b. $27,000 - $32,999 12

c. $33,000 - $35,999 9

d. $36,000 - $38,999 6

e. $39,000 and above 3

10. Applicant’s Priority Points: 5 maximum

a. Priority ranking number 1 5

b. " " " 2 4

c. " " " 3 3

d. " " " 4 2

e. " " " 5 1

f. " " " 6 or below 0

g. No ranking 0

11. Approved Comprehensive Plan Points: 5 maximum

a. Project is located in a city or town whose comprehensive plan 5

has received state certification.

b. Project is located in a city or town whose comprehensive plan 3

has been submitted for state review but not yet received certification.

c. Project located in a city or town that has not yet submitted a 0

comprehensive plan for state review.

B. Explanation of Project Ranking Criteria

1. Job Development Costs

The eventual number of jobs resulting from the implementation of a proposal is a

prime consideration in priority selection. The figures are used to determine a cost per

job. Cost refers to total project cost. “Long range” jobs are those expected once a

facility or project begins operation; do not count construction jobs.

Estimates that are not documented in a study will be penalized by a deduction of 5

points under this criterion. Projects not expected to be initiated within two years will

also incur a 5-point penalty.


2. Area of Influence

This criterion is weighted to favor project proposals having the broadest geographic

significance for economic development. It is anticipated that few project proposals will

receive the 15-point maximum for the category since the bulk of the proposals will be of

local origin with a relatively low prospect for any statewide significance. In fact,

probably very few state-sponsored projects will have this wide- ranging effect.

Definitions of statewide vs. regional significance follow.

Definitions:

Statewide — Having potential for a more geographically universal effect throughout

the entire state and not predominantly affecting only one or a few contiguous

municipalities.

Regional — Having multi-community but not statewide significance.

3. Environmental Factors

The rating method for this criterion rewards applicants whose projects make use of

innovative technologies, such as alternative energy and “closed loop” industrial parks,

that use raw materials more efficiently, and that can reduce consumption of energy,

water, and other natural resources as well as air and water pollution. Of equal weight

under this criterion are those projects that rehabilitate brownfield sites or lead to the

non-residential reuse of certified mill buildings.

Points are also awarded for revitalizing other existing industrial or commercial space

and its associated infrastructure, and for addressing the environmental objectives of the

State Guide Plan.

If credit is claimed under the “brownfields and mill buildings” category, it cannot also

be claimed under the “built environment” category. The “built environment” category is

intended to reward projects not necessarily associated with the R.I. Department of

Environmental Management’s brownfields program or the Enterprise Zone Council’s

certified mill building program, but that follow the same principle of reusing or better

utilizing existing buildings for industrial or commercial purposes rather than developing

greenfield sites.

If credit is sought for fulfilling an environmental objective in an element of the State

Guide Plan, the specific element and objective/policy must be cited. Refer to the State

Guide Plan Overview for a synopsis of the various elements of the State Guide Plan.


4. Essential Project Studies and Permits

This criterion rewards applicants who have obtained the necessary environmental

permits to initiate the project, or who have confirmed from the relevant regulatory

agencies that no permits are necessary for the project. In addition, this criterion awards

points to those projects with applications supported by essential studies, which are

taken to mean planning, engineering, or any other studies prerequisite to

implementation, excluding environmental assessments. Those projects progressing

reasonably toward completion of these studies and obtaining of permits are also

awarded points in this category.

This system recognizes that any project having a negative environmental effect that

cannot be reasonably mitigated will probably be eliminated from consideration under the

State Guide Plan conformance threshold review, which is part of the CEDS process.

Nevertheless, this threshold review does not constitute the in-depth regulatory review

required for the granting of environmental permits.

5. Commitment of Non-Federal Funds

This criterion measures the financial commitment to the project, the ability to initiate

the project in a timely manner and the ability of the project to leverage additional

investment.

6. Employment of Substate Employment Growth Area

This non-project related criterion is weighted to favor project proposals in areas

which are experiencing the poorest job market performance in terms of employment by

place of work. The source for measuring this criterion is the fourth quarter report on

employment by place of work, covered by the Rhode Island Employment Security Act.

Percentages are figured as an increase or decrease in each Substate Employment

Growth Area's percentage change over the previous year's equivalent quarter. Rhode

Island's eight Substate Employment Growth Areas are based upon specific

socioeconomic, cultural and historic relationships as delineated in State Guide Plan

Element 212: Industrial Land Use Plan.

7. Labor Surplus Area

This criterion gives priority preference to projects in those communities that have

been designated as labor surplus areas by the U.S. Department of Labor for the most

current federal fiscal year. Designation is based upon consistently high unemployment

rates and/or other specific “exceptional circumstances.”


8. Enterprise Zones

In keeping with both federal and state policy to direct resources to areas designated

as enterprise zones, this criterion provides preference to those projects specifically

located within an officially designated Rhode Island enterprise zone.

9. Income

Median family incomes obtained from the 1990 Census (the most recent available)

are divided into five ranges for the cities and towns. Those municipalities within the

lowest ranges receive the highest point awards under this criterion.

10. Applicant's Priority

This criterion carries a potential for five bonus points and allows local discretion and

expertise to be incorporated in the statewide priority ranking system by favoring

proposals of highest local priority as assigned by each submitting municipality or other

sponsor. All sponsors are requested to rank their individual submittals in priority order.

11. Approved Comprehensive Plan

This criterion rewards cities and towns whose comprehensive plans (and, if

applicable, updated comprehensive plans) have received approval from the Director of

the R.I. Department of Administration with the highest number of points.


Appendix B:

APPLYING MULTIPLIERS: A SAMPLE CALCULATION

The economic multipliers used in the Rhode Island CEDS to determine the

full impact of projects that are candidates for priority listing come from the

Regional Input-Output Modeling System (RIMS) developed by the U.S.

Department of Commerce. They are of two types, “direct effect” and “final

demand.” The following discussion shows how to apply them in a hypothetical

situation – the construction of a new import/export center in the Port of

Providence.

According to the RIMS model, the category “new construction” has a

direct-effect employment multiplier of 2.3568, and a final-demand multiplier of

30.1 jobs for every million dollars invested. So, every single job in “new

construction” will yield an additional 1.3568 jobs elsewhere in the economy

(indirect and induced employment). These are the jobs added by suppliers,

distributors, service providers and other producers to meet the increased

demand resulting from the project.

If 84 workers are hired to build the import/export center, the following

impact would be expected on jobs throughout the Rhode Island economy:

84 jobs on site x 2.3568 = 198 total R.I. jobs

These 198 jobs would include the original 84 (direct employment), plus 114

additional jobs in other sectors of the economy (indirect and induced

employment).

If the new center cost $6.3 million to build, the impact on employment

during the construction period could be calculated by the final demand method as

follows:

$6.3 million in demand x 30.1 jobs/$1 million = 190 total R.I. jobs

Again, the 190 jobs would include direct, indirect and induced employment. The

discrepancy between the numbers of jobs calculated by the two methods is

insignificant and probably due to rounding.

These jobs would be generated until construction was completed. If

planners wanted to estimate direct, indirect and induced employment arising from

the operation of the import/export center, i.e., the post-construction, “long-range”

jobs, they would need to estimate the center’s operating expenses and then

identify the proper final-demand multiplier (in this case, “business services” at

39.7 jobs per $1 million invested).

B-1


If the operating expenses amounted to $725,000 in the first year of

operation:

$0.725 million in demand x 39.7 jobs/$1 million = 29 total R.I. jobs

These are the direct, indirect and induced jobs that would be supported by the

center that year. It is important to note that these jobs are separate from those

during the construction phase. To estimate the full economic impact of a project,

the jobs generated during construction and those coming afterward should be

considered together.

Source: U.S. Department of Commerce, Economics and Statistics

Administration, Bureau of Economic Analysis, Regional Multipliers: A User

Handbook for the Regional Input-Output Modeling System (RIMS II)

(Washington, DC: U.S. Government Printing Office, 1992).

B-2

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